Skip to main content

tv   Mad Money  CNBC  February 26, 2014 6:00pm-7:01pm EST

6:00 pm
>> cbi. >> i'm melissa lee. see you again tomorrow for more "fast." and meantime, "mad money" with jim cramer, starts right now. my mission is simple, to make your money. i'm here to level the playing field for all investors. there is always homework in summer and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. people want to make friends, want to make you money. call me at 1-800-743-cnbc. don't bet against the consumer. it's a sucker's bet. that's when you look at every
6:01 pm
place we shop at roared higher today. the dow closed up 179 and nasdaq up just .1% and perfect news for stock market that needed more grounding in brick and mortar reality, and not just the internet 24/7. the market has been living under a cloud since the year began, not cloud computing, which people pay anything for. no, i mean a cloud known as the consumer. we have heard non-stop negatives. consider the challenging shoppers going into this week. jobs are hard to come by, payroll numbers in a row hurting consumer spending. you don't spend when you are worried about your job or can't find a new one. feeling heart sick about the consumer's ability to spend and 2/3rds is driven by the consumer. we're a nation of shoppers, or
6:02 pm
at least we thought we were. second, the federal government failed to extend long-term unemployment benefits while at the same time cutting back on food stamps allocations, two of the most important backstops. that's a national dream on purchasing power, but not as big as the third impediment, the heating bill. most houses are heated by natural gas and many have doubled in price. that's a huge hit. some say bills have gone up $300 a month since the miserable weather began. we know america had the worst winter nationwide in 37 years. it kept stores and malls closed and derailed the normal spending patterns. when merchandise doesn't get sold, it gets marked down. >> sell, sell, sell, sell. >> which means profits get hurt and when profits get hurt, stocks go lower. fifth, the competition stiffened
6:03 pm
to the point where the quality retailer is struggling. wasn't that a take away when whole food s couldn't meet projections? maybe consumers weren't paying up for natural organic food. they create that stuff for the stores vying for the same shoppers. the gross sector in the economy, the brightest lights seemed to have dimmed. sixth, walmart missed numbers big time. 100 million people shop at walmart every week for heaven's sake. it can't be walmart specific, can it? it has to be the consumer. not even spending at the biggest discounter around. how slow is this economy? must be nastier than we thought. people like michael jackson and the country's largest car dealer said high inventories, slower growing markets, this year will be a real test, jackson, cried from detroit's auto show. holey cow, autos are important
6:04 pm
to the growth of the u.s. economy. now we have too much inventory. that could be the worst for the country. the consumer's love affair with cars so cool. what is next? layoffs from this hiring machine? eighth, we've been hearing while consumers stopped buying clothes, still buying video games and televisions and the cool stuff from game stop and best buy, right? not so fast. two darlings destroyed then insult to injury, cons, the only hard goods retailer got bought away, cut in half, not two for one stocks but went and announced earnings. still buying the steakers, tvs? no. not spending on her wardrobe and home. housing slowed those rates. nobody is going out and buying new homes anyway. maybe your house doesn't go up in value anymore. ninth, target, one of our favorite discounters reported a
6:05 pm
terrible security breach and another national retailer rival to walmart in the old days was going to fold up like a cheap kmart suit and amazon, not only did people decide they weren't going back to the mall, maybe not even the mall. they did more than any other company to wreck the notion we still like to shop. using amazon, some people say is an admission we hate to shop and consumer spending is 2/3rds of the economy. we came into this week with a level of trepidation and fear about retail that was off the charts just when the majority retailers were about to report how bad could this be? a disaster in the making and then it starts yesterday. looking real bad. first a disappointment from home depot. it's been awhile since we seen that happen. minutes later, macy's hits the tape with the not good news. macy's the last good department chain store and misses and tells
6:06 pm
us in january it was already disappointing. this is terry london for having sake. one of my ceos saying negative things? how badly will these stocks be it? that's what people were thinking. retail stocks were looking down before the opening yesterday and as we got closer to the morning bell, they open barely at all and sore. huh? why? because the retail stocks have gone down or done nothing since the ten-point drum of negativity. in other words, we got too negative. today dollar tree misses, rallies. target does a terrible number but no more terrible than we thought. people are looking into the reach and past it. lowes proves to be doing much better and rallies hard before and after. even j.c. penney jumps off hours with positive guidance and macy's and home depot, they fly again. what the heck? is the market nuts?
6:07 pm
no. they deflected in the negatives and none of the positives like stronger home sales. retailer to retailer confirmed spending on hole is strong. e welcome tron in this cas electronics, paints, good sales since valentine's day. many companies sited that. so profits aren't being hurt. positives like descent spending even on apparel, women's clothes, perfume, expensive handbags. the consumer won't quit. as so many short-selling funds and mutual funds stop believing, the result, a magnificent retail rally. maybe, just maybe, things just aren't as bad as we thought with the most important 2/3rds of the economy that had been pretty much written off by this stock market until this week. so perhaps, it was indeed
6:08 pm
rational to see life in what had become the cheapest sector in the stock market. john in california. john? >> caller: hey, jim. love your show. welcome from sacramento valley. >> oh, man, i love sacra, get rain there, all right. >> caller: it's raining all day today and tomorrow, so things are looking up. jim, i've been looking at -- i bought housing. i bought dr horton, dha, wondering what you think about it and what your long-term is? i tend to hold long. what do you think about horton? >> i think horton is going up. it could be a good spring selling season. rates have not jumped up. there is a housing shortage and i think it will be horton's time to shine. may i go to tim in california, please, tim? >> caller: hey, cramer, cbrl just reported. should i buy more or take profit? my grandparents love it. >> i like it, too. i like the apple pie with the
6:09 pm
cheesecake -- with the piece of cheese in the old days when i weighed 210. the quarter wasn't so hot. how about we do this? take some off the table. this wasn't such a special quarter. steve in georgia, steve? >> caller: mr. cramer, thanks for taking my call. >> of course, thank you. >> caller: i've had good luck with senior housing properties, health care reach. they were recently downgraded for making -- attempting a purchase on this medical office building in new boston. >> right. >> caller: what should i do? >> you know, i saw that, and i found that was worrisome which is why i tell people you want to be in ventest. that has the best long-term record. i feel best about that one. maybe once again, things aren't as bad as we thought and maybe
6:10 pm
not so crazy for the cheapest part of this market, the retail portion of it to rally. "mad money" will be right back. coming up, wave of the future? white wave foods has risen 20% this year as more americans look to clean up their diet like horizon organic and silk. is this the kind of long-term trend that could power your portfolio higher? and later, make the call. from contract-free phones to family plans, the wireless industry is in flux. which stock will come out on top? cramer talks with spent ceo to find out. plus, profitable position? it's not the latest tech or a ground-breaking pharmaceutical company, but it may be the most important thing to have in your portfolio with the market near all-time highs. find out what it is in cramer's playbook all coming up on "mad money."
6:11 pm
6:12 pm
save you fifteen percent or more on car insurance.ould yep, everybody knows that. well, did you know the ancient pyramids were actually a mistake? uh-oh. geico. fifteen minutes could save you fifteen percent or more on car insurance.
6:13 pm
then don't miss sleep train's wbest rest ever? you'll find sleep train's very best mattresses at the guaranteed lowest price. plus, pay no interest for 3 years on beautyrest black, stearns & foster, serta icomfort, even tempur-pedic. and rest even better with sleep train's risk-free 100-day money back guarantee. get your best rest ever from sleep train. superior service, best selection, lowest price, guaranteed. ♪ sleep train ♪ your ticket to a better night's sleep ♪
6:14 pm
right on the front page of today's new york times, one of my favorite investable themes, healthy heading. obesity rate for young children plummets 43% in a decade. kids who are super young two to five years old and while it's glove initiatives as potential reasons, i think the reason for the decline in childhood obesity. the young parents of these young kids are extremely conscious about what is wrong with the food chain in this country and more careful what they feed their children. i read about the organic and get rich carefully, and i think it will be a long-term moneymaker, years to come. but long-term trends can run
6:15 pm
into short-term stumbling blocks. fresh market, name a few, however, there is one terrific stand up in the ground. the company that managed to overcome the weakest, white wave, the maker of organic milk, coffee dreamers and so i and almond milk based products that spun off about 60 months ago. the company beat off a 20 cent basis, higher than expected revenue and 11.5 and double digit. stock jumped 10% and the news hasn't looked back since. white wave has given us a 30% back. rallied 65% since it became public. i would not be surprised if it has a lot more room to go. let's check in with greg ingles and see where the company is going and headed. welcome back to "mad money." congratulations on the job you've done. >> thanks so much. thanks for having me back. >> this obesity story, it's about you and your company.
6:16 pm
>> it is a little bit about us. i think it's about the broader society consciousness about the food that we eat. >> and let's start there, because you -- i can't -- i have very little time because there is so much i want to get the. you say you have the best kept secret in the world. i want to start there. horizon organic. this is about what we're fiding our kids, this is two to five. >> absolutely. i have four little girls at home. when lily sits down at the dinner table, she wants to eat something savory and delicious and mac and cheese is a staple with families of kids. now we have a chance to bring something to that bomb that's trying to feed her family all organic ingredients made with organic cheese and filling them up, giving them the fuel they need but doing it in a way that's really great for them for the long-run. >> can't this brand be on aisle
6:17 pm
after aisle after aisle? >> it will be interesting to see where horizon will grow. it's a terrific brand, and moms trust it, and we'll maintain the trust by putting it on things that are family and kid-meal snack occasion centric products. >> the other story i think is huge since we talked last. i've been buying your stuff at the natural foods store. i didn't know earth bound. this is maybe i think the greatest brand name in the produce aisle. how big can this be? >> well, it's growing way into the teens. on a consistent basis. so this business, this brand is a powerful brand because it is truly authentic. it is far and away the leader in the organic salad and vegetable space, and what it gives us is the opportunity to take -- to go into an area of the store, the produce section where mom wants to shop. it's fresh. she feels great about brinking
6:18 pm
things home from the produce section and feeding her kids but there is always the opportunity to do the work for her. power meal bowls where you have all the ingredients for a savory salad you might get at a restaurant. organic ingredients. she can put that on the table. everything is done. fantastic food. a tremendous amount of room to run. >> stackables but not packaged food, processed snackbles. i see the things that moms will be putting in the lunchbox in the future. >> absolutely. >> let's talk about the one that's grown by leaps and bounds. it's not quit. silk almond. how can this brand be accelerating? >> it's sourcing volume from a gigantic category. the fluid milk business, a 25 billion-dollar category.
6:19 pm
small movements away from these traditional categories towards the way i think people will eat in the future has a huge impact on companies like us. >> it turned out that a lot of people were worried about almonds. you're not sourcing in central value. you have all the water you need. >> we're in great shape -- by the way, my guys call me and it's raining in solinsa. >> we've seen this almond thing come and it's been big. we sourced almonds out through the middle of 2014. we're well covered but they need rain in southern california no question. >> i hesitate to bring this up because it could be so huge and i don't want people to think i'm bringing something up for nothing. we know your brand is the best brand in the world. what could the joint venture mean? >> i've said this several times about china. if china lives up to our expectations, it could be the
6:20 pm
biggest part of the value of this business -- >> we have a lot of people talk about china. coached by and the nike, you're talking about this could be that big for you. >> so, it -- china has the aspirations that every nation has for its people. one of those is to give them as high quality diet and much nutrition as possible. they have a huge population. so moving people up the nutritional food chain really means moving them into more and more protein at some level. right? that's how they get the fuel they need. the chinese have gone down the path of moving into dairy and more meat in their diet, but they are just confronting limits on the global supply chain at some level. this sweeter products, the silk sweeter products offers a fantastic way to hydrate the diet of the chinese and emerging parts of the world that is much more sustainable and much more cost effective and i think we'll be increasingly the way we eat
6:21 pm
all over the world into the future. we're really excited about the china opportunity. >> how are you going to stay independent when these guys have no other growth at all? you can make the difference for all the companies we love and brands that have shrunk? how do you stay independent? >> we stay independent by continuing to deliver and show people the value in white wave foods. if you take it and die lute it, it won't make as big of an impact. >> and by far the best performer in the supermarket. congratulations. great work. chairman and ceo of white wave. look at this. this is the future. stay with cramer. coming up, making the call. sprint shookup the cellar industry announcing a brand-new to connect. will this help it stay ahead of the competition? cramer sees who could come out
6:22 pm
on top. whose in? whose out? find out who made the first cut, the top 100 leaders, icons and rebels, plus you voted, we listened and added your write-ins. now it's time for the final showdown. what will be named the most influential leaders of the past 25 years. entrepreneurers, visionaries, a brand-new chance to vote for the ultimate list, the first 25. vote now at csnbc/25. we asked people a question,
6:23 pm
how much money do you think you'll need when you retire? then we gave each person a ribbon to show how many years that amount might last. i was trying to, like, pull it a little further. [ woman ] got me to 70 years old. i'm going to have to rethink this thing. it's hard to imagine how much we'll need for a retirement that could last 30 years or more. so maybe we need to approach things differently, if we want to be ready for a longer retirement. ♪ if we want to be ready for a longer retirement. honestly? i wanted a smartphone that shoots great video.
6:24 pm
so i got the new nokia lumia icon. it's got 1080p video, three times zoom, and a twenty-megapixel sensor. it's got the brightest display, so i can see what i'm shooting -- even outdoors, and 4 mics that capture incredible sound. plus, it has apps like vine -- and free cloud storage. my new lumia icon is so great, even our wipeouts look amazing. ♪ honestly, i want to see you be brave ♪ ♪ what's happening with sprint? the number three player in the wireless industry that's been a truly magnificent performer in 2012 and 2013. last year the company completely reorganized, soft bank the japanese firm bought a 70% stake brought a capital infusion and
6:25 pm
sprint turned around and bought the 50% of clear wire it didn't own. it was reborn as the new sprint that started trading under the same symbol and for the last six months it didn't look back and rallied from six bucks and change to $11. when the new year began, it dropped to $8.39 as of today and during last month's sell off, the biggest winners left and right and might have to do with the reinvigorated competition from t-mobile. the company posted a strong quarter, higher than expected revenues and 69,000 subscriber losses when they were looking for 400,000. the stock is up over 30% since we last spoke to the ceo. 2014 is supposed to be a turnover. so what does that mean for the stock at these levels? what's all this talk about a soft bank led industry consolidation and this new found competition with facebook and
6:26 pm
google and the cable companies? let's take a closer look with dan hesy. let's find out more, welcome back to "mad money". >> hi, jim, good to be here. >> dan, you had to spend a lot of money to build out the network. i don't know, so much has to be done. worried about dropped calls and the change over. are you satisfied with the quality with your network yet? >> no, we're not satisfied yet. we'll be 2/3rds of the way finished by the middle of the year. we'll be finished with the complete rip and replace of the original sprint network. we're tearing out every nut, bolt, screw, wire completely replacing it, which is why turn levels are elevated in past quarters than they will be for the past first and second quarter. when the stock began to take a run was on october 30th when we announced sprint spark and investors have a longer term view. they know soft bank is an
6:27 pm
investor that takes a longer-term view and see what we're building for 2015. even though there is, if you will, a rough road as we replace the old network and rebuild this fantastic new network, in the next couple quarters, i think our investors understand that in the short term are and looking forward to the long term and it's been less than six months. >> i was reading this before we got together here, this is from february 24th, thesis in tack, negative working capital, you may need to raise money. you have soft bank as a partner. why would you ever have to come to the market for money more? >> it's a decision we'll reach when we cross it. we'll spend $35 billion over a five-year period to build this phenomenal network. it's really a decision in terms of capital. >> there is talk about competition and corporate consolidation. we know you have been down in washington. i know you can't tell us yes,
6:28 pm
there will be a bid for this or that. isn't the computation changed dramatically from when we first started talking a few years ago, and if one company like sprint combined with t-mobile, it wouldn't really change the competitive landscape? >> i wouldn't say that. i think we have a duooply and i believe it will lead to stronger and better competition as long as the consolidation doesn't include the big two. so really what we have today is two strong competitors. what we talk about is not going from four competitors to three, but going from two big, strong competitors to three big, strong competitors. >> and i mean, big three competitors means t-mobile and sprint are getting together. >> who knows what might happen. i think i'm perhaps reading too much into your question, but if that were to happen, and i'm not
6:29 pm
saying it will or won't, i believe that three strong competitors is better for the competitive landscape in the u.s. >> the reason i ask that is that last week $19 billion, facebook buys basically a phone company. 12 miles down the road from you, dan. google is building a phone company. i mean, they are much bigger than everybody else in the amount cash. isn't this one of the most fractioned industry in the world? four guys get together and still competitive. >> i think you're indicating we have to look at the competitive landscape. i think facebook's investment shows how important wireless is. the application being text is a large issue in terms of customers being charged on a per text basis is larger issue outside the u.s. than in the inside. you have to look at competition
6:30 pm
beyond today's wireless carriers. >> when you saw 19 billion, didn't you think i wish i could play with that funny money? >> i didn't. it shows how valuable the wireless space is. >> all right. fair enough. when you're taking a look at what is going on in the actual deals. i pick up the paper and it looks like this guy ledger from t-mobile. he's saying listen, come to me, i'll pay you money, leave anybody. you got the turn problem you indicated. when you see this kind of rebel in the industry. doesn't it make you fret? >> no, it just gives us a sense of urgency in completing the network build. we're building what we think will be the finest network in the world, and it just gives us more motivation to get that done faster. >> all right. now, some of the research saves where your strength came in was from tablets. can you give us the landscape how apple is doing and tablets are doing? is that where new users are coming in? >> that's where we see the
6:31 pm
greatest consumer growth. many americans already have phones and we're the revenue growth of the industry is, is customers buying additional devices and the number one device right now are tablets and wearables like, you know, bracelets, you know, my samsung gear watch which i'm wearing here. those are all potential revenue items, as well. but tablets are making a difference. >> did netflix pay you a fortune to be able to go over your stuff? >> right now, netflix does not pay us for using our network. >> well, seems like they should. one last question, excellent piece, corporate magazine because you are a sprinter and sprint marathon in the category. rigorously independent man and run an amazing culture at sprint. you've been bought by another company. do you think one day you should be the ceo who runs the company and not someone who reports to
6:32 pm
another country? because you're about doing stuff for the community and your company, but you're not independent anymore. >> we are. in many respects we do have a majority investor but traded as an independent company. the majority of directors are independent. even though there is a significant amount of influence. i'm the ceo of an independent company. >> and you want to stick with it? >> i'm enjoying it very much. >> dan, thank you very much. you always tell it straight. thank you so much for coming on "mad money." that's the ceo of sprint corporation. stay with cramer. cramer is rolling out the red carpet, and naming the best, worst, and the stock starlets set to steal the show for the
6:33 pm
rest of 014. the the first golden bulls special debuts this friday on "mad money." [ male announcer ] these days, a small business can save by sharing. like carpools... polly wants to know if we can pick her up. yeah, we can make room. yeah. [ male announcer ] space. yes, we're loving this communal seating. oh, it's great. yeah. [ male announcer ] the best thing to share? a data plan. ♪ new at&t mobile share value plans for business. our best value plans ever. for example, you can get 10 gigs of data to share. and 5 lines would be $175 a month. plus you can add a line anytime for $15 a month. sharing's never been better for business. ♪ sharing's never been better for business. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all.
6:34 pm
that really is you? if they're not a cfp pro, you just don't know. find a certified financial planner professional who's thoroughly vetted at cfp -- work with the highest standard. ♪ aflac, aflac, aflac! ♪ [ both sigh ] ♪ ugh! ♪ you told me he was good, dude. yeah he stinks at golf. but he was great at getting my claim paid fast. how fast? mine got paid in 4 days. wow. that's awesome. is that legal? big fat no. [ male announcer ] find out how fast aflac can pay you humans -- we are beautifully imperfect creatures, living in an imperfect world. that's why liberty mutual insurance has your back, offering exclusive products like optional better car replacement,
6:35 pm
where, if your car is totaled, we give you the money to buy one a model year newer. call... and ask an insurance expert about all our benefits today, like our 24/7 support and service, because at liberty mutual insurance, we believe our customers do their best out there in the world, so we do everything we can to be there for them when they need us. plus, you could save hundreds when you switch -- up to $423. call... today. liberty mutual insurance. responsibility. what's your policy?
6:36 pm
award season is coming to "mad money" on friday with our first golden bull special. cast the vote for the stock you think should be honored with the best picture award by tweeting me at j cramer hashtag golden bulls. many of you at home started voting like at raven ben tweeted it has to be dr. slifer -- got to spell his name right. thanks for rolling out the carpet -- ben, i need more than that. i need a lot of different names. go and send me the nominees and friday -- i might dress up, maybe. so, now it is time, it is time for the lightning round. cramer's "mad money." buy, buy, buy, sell, sell, sell. and then the lightning round is over.
6:37 pm
are you ready? time for the lightning round. elizabeth in oklahoma? elizabeth? >> caller: boo-ya from thunder nation, mr. cramer. >> what is happening? >> caller: progressive was taken to the wood shed even though it beat special earnings, why -- >> i got to tell you, elizabeth. the property and casualty business for the automobile insurance business has gotten very cut-throat. that's why i don't want to be in progressive. leslie in texas, leslie? >> caller: jim, thanks for taking my call. >> of course. >> caller: i've been trying to buy cap stead mortgage for a month. >> yeah, i know everybody is going crazy. sorry, we got to change in interest rates. this is not what i want to do, no thank you. pauly ann in california, pauly ann? >> caller: hi, game, greetings from rainy, california. >> look, you needed rain. glad you have it. could help our food bill, what
6:38 pm
is up? >> caller: we're delighted. ambridge. we're thinking of dumping it. what do you think? >> it has a descent yield. many are temping partners. i did a lot of work on trans canada. can i go to greg in florida, greg? >> caller: boo-ya cramer. how about micron technology? >> i like micron installed. western digital. it's stalled. micron is an inexpensive stock. i am not going to pound the table on it like i did last year at this time, but it is not expensive and i expect a descent quarter. hermann in ohio. hermann? >> caller: hey, jim, how are you? >> good. how about you? >> caller: good. thanks for petting me in sbac. do you think it still has room to run?
6:39 pm
>> yeah, as a matter of fact, i think it's best in show and we know from listening to all these ceos from telephone companies, you need more towers, chance responders and that's where it will make is much money. john in new york, john? >> caller: hey, bo, bo, boo-ya. first time caller. my question is about starbucks. i think starbucks reported a good quarter on january 23rd, but been in the low 70s since with a close at $68.97 on february 3rd. >> the right. the stock is also not hitting new highs. should i buy more -- >> short-term it's worry some. many people worry about the price of coffee. long-term not worry some. the very bankable howard schultz doing digital work. expanding internationally. if it gets back to 69.70, what can i tell you, you'll be with me in my travel trust pulling the trigger. and that ladies and gentlemen, is the conclusion of the
6:40 pm
lightning round. the lightning round is sponsored by td ameritrade. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. you want everything.orks with the mobile trader app. an expert ford technician knows your car's health depends on a full, complete checkup. the works. because when it comes to feeling safe behind the wheel, going the distance and saving at the pump
6:41 pm
you want it all. get our multi-point inspection with a a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup. only at your ford dealer.
6:42 pm
6:43 pm
i have over three decades of experience in this business, and i consider it my mission to teach you as many of the lessons that i've picked up over the years, so i can get away with. in order to make you a better investor and a better financial planner. we don't really teach money in this country, not in high school, not in college. i don't think it's totally crazy for a tv crazy personality with a sound effects board to do some educating. that's why every week we take a page out of cramer's playbook. the segment where i take your questions about personal finance and basic money management from twitter at jim cramer hashtag get a plan. you know where else you can find more answers to some f yoof you hashtag tweets, brkmon. i want to answer a question
6:44 pm
that's permanent to the stock market now from laura. what percentage of money should remain in cash in order to buy more stock during a market dip? laura, that's a terrific question and gets to something that every investor should be thinking about here. how much cash should you keep in the portfolio so you can pounce during the moment of weakness? that may not sound relevant now, but in fact, the truth is just the opposite. your best chance to prepare for the next sell off is when the averages are riding high. like they are now. the best way to do that is by stockpiling some cash in your portfolio. so first of all, before you get into the actual amount of cash, let me make one thing crystal clear, you should always have some cash in your portfolio. in fact, you might say there are moments when cash is your most important position. too many of the people i talk to tend to be fully invested all the time meaning they have 100%
6:45 pm
of the portfolio in stocks or bonds for that matter. some are reckless enough to borrow money to own stocks. like you can live in them or something when they go bad? i got news for you, being fully invested is something you should almost never do. having no cash in your portfolio removes your flexibility and who do you think you are to be that confident and brazen? to be that foolish? i'm not going to say cash is king. it isn't much -- stocks are much better value than cash, plus i'm instituting a cap on cliches in the show. think of your portfolio as a fine tuned automobile. to extend the metaphor, the cash is like the gasoline in your car's tank. it allows you to buy more shares of stocks you own without pulling money out. when your portfolio is out of cash, that's like trying to drive your car on an everyonety
6:46 pm
gas task. keep some cash on the sidelines so you'll stay flexible. so how much cash should you leave in your portfolio at any given time? you know what, that varies. i'll say this from my charitable trust. i like to keep my cash position above 5% of the portfolio at all times and below 5% and i feel like the trust might as well be running on empty. the 5% figure is the absolute minimum. how do we figure out what's the right amount of cash at any particular moment? this counter intuitive. the higher the stock market goes, the more cash you should keep on the sidelines. when everything is roaring, when stocks are making you a killing, that's the moment you want to increase your portfolios's cash position. how does that make sense? shouldn't you want more exposure to stocks when the market is on
6:47 pm
fire? remember laura's original question? she wanted to know how much of her portfolio should be in cash? should she be in a position to buy more cash? she must be watching closely. you need to have cash and the best time to raise it is when it's running high. you're just going to end up selling stocks at lower prices. perhaps at the exact moment when you should buy them but you don't have any cash. i think you should keep seven to 10% of your portfolio in cash. it might make sense to air on the higher side. i'm not. but i'm saying if you are. you may feel like keeping such a big cash position because you could miss out on upside and maybe you don't want that. the point here is that the next time you catch a downdraft, you'll be able to quickly put the cash to work buying more of your favorite stocks at lower more attractive prices. keep in mind there is another sale off. we had a 6% sale for heaven sake
6:48 pm
and whenever that happens, you don't want to be caught with your pants down. finally, is there ever a moment it makes sense to put all of your cash to work? there are times when you do want to be fully invested, when you should pour all cash into stocks. those are rare. you only put all of your cash to work after a dramatic sell off, a decline in excess of at least 10% on the s&p 500. so for example, when the s&p plunged at the beginning of this month, that was a moment to move a big chunk of your cash position to stocks but that wasn't the 10% decline. so you should have kept some cash on the sideline in case the market went lower. that 5% cash position is there to use it to take advantage of the next 10% decline in the averages. hopefully, you'll have to wait a long time before that happens, but when it does, you need to be ready. never under estimate the
6:49 pm
importance of keeping cash in that port poll owe. you need it if you want to carefully buy stocks in the weakness. for those of you fully invested. take advantage of the recent strength and use it to build up the cash vision by selling some. that's not a criticism of this market, please. it's a discipline you need to practice if you want to be a better investor. you know what else you can call it? how about buy low and sell high? has that gone out of fashion? keep the tweets coming at jim cramer hashtag get a plan. will be your coach and this is the playbook you need. let's go to luca in texas, please. >> caller: dr. jim. welcome back, we missed you. >> i missed the set. i miss everybody but most importantly, i missed my callers. what is up? >> caller: i want to ask you question on zynga. i know the stock has been up 50% and they just got dismissed on a lawsuit. what is your take on that stock? >> i like that new management
6:50 pm
very much. when you get behind the stocks with quick doubles, they do anything that steps up, groupon which troubled from five to ten, you get the pull back. i'll tell you, you know what? pull the trigger. i always say i have the smartest viewers out there. i want you to keep those questions coming. remember, the tweets, get a plan. after the break, i'll try to make you more money. honestly? i wanted a smartphone that shoots great video. so i got the new nokia lumia icon. it's got 1080p video, three times zoom,
6:51 pm
and a twenty-megapixel sensor. it's got the brightest display, so i can see what i'm shooting -- even outdoors, and 4 mics that capture incredible sound. plus, it has apps like vine -- and free cloud storage. my new lumia icon is so great, even our wipeouts look amazing. ♪ honestly, i want to see you be brave ♪ ♪ humans -- even when we cross our "t's" and dot our "i's," we still run into problems. that's why liberty mutual insurance offers accident forgiveness with our auto policies. if you qualify, your rates won't go up due to your first accident. because making mistakes is only human, and so are we. we also offer new car replacement, so if you total your new car, we give you the money for a new one. call liberty mutual insurance at... and ask us all about our auto features, like guaranteed repairs, where if you get into an accident
6:52 pm
and use one of our certified repair shops, your repairs are guaranteed for life. so call... to talk with an insurance expert about everything that comes standard with our base auto policy. and if you switch, you could save up to $423. liberty mutual insurance. responsibility. what's your policy?
6:53 pm
the money has got to come from somewhere. we know there hasn't been a lot of new money come into the stock market since the year began. bond funds, bond etfs, fixed income is the highest aisle on the financial supermarket. you think there is a buy one get one. but retailers fly up today after many of the most aggressive momentum stocks roared, thank heavy vans somebody took a breather. the fuel is not being added to the fire but taken from a couple of formally hot spots and put into others. that's what is happening with not one but two groups right now and it's fascinating thing to watch unless you're stuck in them. i'm talking about the consumer packaged good stocks in the banks. both have sets of woes and we have to deal with them head on. banks need to have higher interest rates go higher. certainly higher than they are
6:54 pm
right now. in other words, we need to see interest rates go closer to ten, on the ten-year closer to three %. these banks are not earning enough a off your deposits to get the interest humming. fewer bad loans determines how high the bank stocks can go. now there is something more insidious happening. you pick up the paper, it's back. senate says credit hide billions in assets. what was the bake tiig take awa? the bank has to add 3,000 more compliance people. those people are nice but a dead weight lose and bank of america, one of the cheapest in my charitable trust, has new investigations that could again, raise legal bills. yes, the banks are cheap but who can take this pain? obviously not the party shareholders, no matter how cheap the stocks may be. the consumer packaged goods,
6:55 pm
those stocks, wow, the foods and beverages, shampoos, drugs, the money is pouring out like there is no tomorrow. why? first, i think because the yield s aren't that compelling and rising interest rates and rates around the corner. second, remember the story in the front page in the new york times today, obesity rate for young children plummets 43% in a decade? how did that happen? how about a revolt against fatty snacks, sugary scereals, cookie, from what many are rapidly coming to conclude around the corrupt food chain. do you think the all natural and plant-based food is up 23% this year, do you think that's just some sort of well, a coincidence? well, almost all the conventional food and beverage stocks have been hammered. does it shock you chipolte is
6:56 pm
gone from $555? look at the profits of cvs, walgreens and rite -aid are making. those profits are out of the highs of these big, heavily promoted name brand companies that seemed to have lost their edge about the new frugal that i write about. dividends too low to be compelling. a food chain we don't trust and store brand knock off as we do? these are the reasons that term styles are in action as money flees from the banks and consumer package good stocks and you know what? i can't expect them to verse any time soon. stick with cramer. tomorrow, kick off the trading day with squawk on the street. live from post nine at the nyse. >> i'm going to have tequila there this weekend, i'll tell you the that.
6:57 pm
>> we go there, too. i have low testosterone. there, i said it. see, i knew testosterone could affect sex drive, but not energy or even my mood. that's when i talked with my doctor. he gave me some blood tests... showed it was low t. that's it. it was a number. [ male announcer ] today, men with low t have androgel 1.62% testosterone gel. the #1 prescribed topical testosterone replacement therapy increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breast-feeding, should not use androgel. serious side effects include
6:58 pm
worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. like carpools... polly wants to know if we can pick her up. yeah, we can make room. yeah. [ male announcer ] space. yes, we're loving this communal seating. oh, it's great. yeah. [ male announcer ] the best thing to share? a data plan. ♪ new at&t mobile share value plans for business. our best value plans ever. for example, you can get 10 gigs of data to share. and 5 lines would be $175 a month. plus you can add a line anytime for $15 a month. sharing's never been better for business. ♪
6:59 pm
[ car alarm chirps ] ♪ [ male announcer ] we don't just certify our pre-owned vehicles. we inspect, analyze, and recondition each one, until it's nothing short of a genuine certified pre-owned mercedes-benz for the next new owner. [ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ hey, don't forget, come see me tomorrow at 7:30 p.m. over at
7:00 pm
words books in maplewood, new jersey. my local bookstore. not only will i be signing copies of my new book "get rich carefully." i'll be taking questions. see me tomorrow. it always there's always a bull market somewhere and i try to find it just for you on here on "mad money." i'll see you tomorrow. \s. the bail is off, major new supply-side pro-growth tax reform plans, that's from ways and means chairman dave kamf. and i don't understand why top republican leaders are trashing it. congressman camp will join us live tonight to talk about his plan. also this even harry reid says all the well-documented stories of obamacare paying enough people are not true. really, mr. leader? he


disc Borrow a DVD of this show
info Stream Only

Uploaded by TV Archive on